MICROCAPITAL BRIEF: Microfinance Growth Slows in Andhra Pradesh, Quickens in Other Indian States

According to a statement attributed to chief executive officer Mr Alok Prasad of Microfinance Institutions Network (MFIN), a trade association of 46 Indian microfinance lenders, the microfinance sector in the Indian state of Andhra Pradesh is expected to experience reduced growth for the financial year ending on March 31. Financial information has not yet been released, but unnamed experts cited by Mr Prasad say growth in the state could slow to zero. This will be the second year- since a repayment downturn hit Andhra Pradesh in 2010- that the sector has experienced slower growth.

On the other hand, the microfinance sector in other Indian states reportedly is experiencing approximately ten-percent to 15-percent growth. According to a statement attributed to chief financial officer Mr S. Dilli Raj of SKS Microfinance (SKS), an Indian microfinance institution (MFI), SKS had more disbursals in non-Andhra Pradesh states in the fourth quarter of this fiscal year than it did in 2011. Grameen Koota, a Bangalore-based MFI, reportedly experienced portfolio growth of INR 100 million (USD 1.9 million) this year. In 2010, Grameen Koota reported a gross loan portfolio of USD 56.4 million.

By Charlotte Newman, Research Associate

About Microfinance Institutions Network (MFIN)
The Microfinance Institutions Network (MFIN) is a trade association of 46 Indian microlenders that operate as non-banking finance companies and together reportedly account for approximately 80 percent of the Indian market. MFIN is supported by the Omidyar Network, a US-based philanthropic investment firm, and the International Finance Corporation (IFC), a member of the World Bank Group.

About SKS Microfinance
SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers microfinance products through a group-lending model to impoverished women in India as a for-profit, non-banking finance company. They have recently diversified into providing gold loans, funeral assistance and loans to small retailers. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. SKS currently trades on the Bombay Stock Exchange. As of December 31, 2011, SKS reports total assets of USD 389,370,524, a gross loan portfolio of USD 341 million, approximately 4,303,000 borrowers, return on assets (ROA) of -66.10 percent and return on equity (ROE) of -152.48 percent. SKS has raised approximately INR 918 crore (USD 181 million) through securitization deals since January 2012.

About Grameen Financial Services Private Limited
Grameen Financial Services Private Limited (GFSPL), popularly known as Grameen Koota, was founded in India in 1999 as a project under the nongovernmental organization T Muniswamappa Trust and today is an independent non-banking financial company (NBFC). GFSPL operates in Maharashtra, Karnataka and Tamil Nadu states and offers products and services such as housing microfinance, vocational training loans, workshops and educational centers. As of year-end 2010, GFSPL reports total assets of USD 65 million, a gross loan portfolio of USD 56.4 million and 321,161 active borrowers.